S&P cuts Spain's credit rating close to junk

Standard & Poor's has cut Spain's credit rating by two notches to one level above junk status, warning the government's policy options are limited as economic recession deepens.

The downgrade to BBB- from BBB+ comes with a negative outlook as S&P said there is a lack of clear direction in eurozone policies and significant risks to economic growth and budgetary performance. "The downgrade reflects our view of mounting risks to Spain's public finances, due to rising economic and political pressures," said the rating agency in a statement. "In our view, the capacity of Spain's political institutions (both domestic and multilateral) to deal with the severe challenges posed by the current economic and financial crisis is declining." S&P said it would downgrade ...